Crude oil pulled back on Tuesday as investors remain cautious ahead OPEC+ meeting scheduled for Sunday.
Brent crude oil, against which Nigerian oil is priced, shed 0.6% to $81.81 a barrel, while U.S. West Texas Intermediate crude oil dropped 0.7% to $77.32 a barrel.
The retreat follows a 2% gain recorded on Monday after certain oil reports suggested that OPEC+, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, might contemplate additional oil supply cuts during the meeting.
However, short-term speculators taking profits and technical chart indicators signaling overbought conditions contributed to the pullback.
Market analysts are speculating on the potential outcomes of the OPEC+ meeting, with some predicting an extension or even deepening of oil supply cuts into 2024.
Helima Croft, an analyst at RBC Capital, suggests that while there may be room for a deeper reduction, Saudi Arabia could seek additional contributions from other members to share the adjustment burden.
Concerns over demand growth, especially from China, the world’s largest oil importer, and worries about a possible U.S. recession in 2024, contribute to the uncertainty in the oil market.
The recent warning from Walmart about potential deflation also adds to the cautious sentiment among traders.
Oil prices have experienced a 16% decline since late September, influenced by record-high crude output in the U.S. and concerns about global demand.
Traders are closely monitoring inventory reports with expectations that U.S. crude and gasoline stockpiles will increase while distillate inventories drop.
As the OPEC+ meeting approaches, the oil market remains sensitive to geopolitical developments and economic indicators, with investors navigating a complex landscape of supply and demand dynamics.
